On August 23, 2017 was published the Decree No. 9,143 (“Decree No. 9,143/2017”), which changed some aspects on the commercialization of electric power in Brazil.
Find below the main changes brought by the Decree No 9,143/2017.
· ONS Board of Directors
The composition of the Board of Directors of the National Electric System Operator (“ONS”) was amended to include a seat for a member to be nominated by the President of the Energy Research Company (“EPE”) and a seat for a well-known civil society representative, which will be appointed by the other members of the Council.
Thus, the ONS Board of Directors will now have 17 members, with the following composition:
(i) a representative appointed by the Ministry of Mines and Energy (“MME”);
(ii) five representatives appointed by the power production agents;
(iii) four representatives appointed by power transportation agents;
(iv) five representatives appointed by large consumer agents;
(v) a representative appointed by the President of EPE; and
(vi) a well-known civil society representative appointed by the other members of the Board.
· Special Consumers
Despite the provision in § 5 of Article 26 of Law No. 9,427/1996 that consumers whose load is greater than or equal to 500 kW may acquire energy from incentivized sources[1], (known in the power market as “special consumers”), up until now there was no legal definition of the special consumers. Thus, Decree No. 9,143/2017 has brought this definition, considering the special consumer as the free consumer or set of free consumers whose load is greater than or equal to 500 kW and determining that they acquire energy from incentivized sources.
However, in our opinion, the Decree No. 9,143/2017 bears a subtle semantic impropriety in conceptualizing the special consumer as a “free consumer”, which according to the law is the consumer whose load is equal to or greater than 3MW and that can acquire electric energy from any source. The most appropriate would be not to use the term “free”, but only “consumer”.
· Involuntary Exposure of Distributors
The involuntary exposure of the electricity distributors (“Distributors”) will be analyzed by National Electric Energy Agency (“ANEEL”) considering the maximum effort made by the agent. Furthermore, it was included the item V in the paragraph 7 of Article 3 of the Decree No 5,163/2004 to predict that the exercise of the purchase option by free and special consumers will be considered as involuntary exposure.
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[1] Paragraph 5. The uses referred to in items I and VI of the caput of this article, the undertakings with a potency of 5,000 kW (five thousand kilowatts) or less and those based on solar, wind and biomass sources whose power injected into transmission or distribution systems is of 50,000 kW (fifty thousand kilowatts) or lower potency may commercialize electric power with a consumer or group of consumers, whose load is greater than or equal to 500 kW (five hundred kilowatts), observing the periods set in art. 15 of Law No. 9,074 of July 7, 1995, according to ANEEL regulations, and the supply may be complemented by generation projects associated with the sources mentioned herein, aiming to guarantee their energy availability, but limited to 49% (forty-nine per cent) of the average energy they produce, without prejudice to the provisions of paragraphs 1 and 2 of this article. (Wording provided by Law No. 13,360, of 2016).
· Auctions for the Purchase of Power
There will be at least 2 annual auctions for the purchase of power from new projects (one A-3 or A-4 and the other A-5 or A-6) and 1 auction for the purchase of electricity from existing projects (A-1), provided there is demand declared by the distribution agents.
The MME will publish an estimated schedule for the auctions to be held by March 30 of each year, in order to allow the planning of those interested in participating in the events.
In this sense, the auctions will be promoted as follows:
(i) between years “A-3” and “A-6” for new power auctions;
(ii) between years “A” and “A-5” for existing power auctions;
(iii) between years “A-1” and “A-6” for auctions of alternative sources;
(iv) between years “A-5” and “A-7” for auctions from projects indicated by National Council For Energy Policy (“CNPE”) and approved by the President of the Republic; and
(v) between the years “A-5” and “A-7” for the new power auctions bidding together with the transmission assets.
New ventures may participate in existing power auctions, provided that their operation commencement is prior to the year of the beginning of the supply.
Furthermore, existing power auctions must be carried out before the new power auctions, in order to contribute to the tariff modality.
It also brings the possibility of the distribution agent to contract in the auctions of existing power the amounts of electric power necessary for its market recovery, defined as the amount of electric power referring to the sum of the amount of replacement power not acquired in the previous five years to year of the auction. The frustrated purchase in existing power auctions for market recovery could be made in new power auctions.
· Short Term Market (“MCP” )
It brings the possibility of MCP’s financial settlements being performed on a less than monthly basis.
· System Service Charges (“ESS”)
The ESS payment forecast became mandatory, since the Decree No 9,143/2017 provides that the commerce rules should (the previous wording was “may”) provide for payment of the cost to cover:
– dispatch outside of merit by restriction of transmission within submarkets or by power security, to be paid by consumers, with possibility of differentiation between submarkets; and
– displacement of the hydroelectric generation referred to in art. 2 of Law No. 13,203, as of December 8, 2015. (Law No. 13.203/15).
The autoproducer will be assimilated to the consumer in the portion of its net consumption.
· Physical Warranty Quotas
Reduces from 95% to 90% the physical power guarantee quotas to be allocated to Distributors for balance measurement purposes.
· Commercialization of power by companies under federal, state and municipal control
An express provision of exemption from the execution of auction for the sale of power by agents of power generation under federal, state and municipal control was included in the Decree No. 9,143 / 2017.
· Reduction of over-contracting by distribution agents
The Decree No 9,143/2017 allows the reduction of the amount of power contracted in the Regulated PPAs resulting from the migration of potentially free and special consumers to the Free Trade Environment.
Finally, the Decree No 9,143/2017 brings another important change, because it allows distribution agents to enter into, with the free consumers, generators, traders and autoproducers, contracts for the sale of surplus power. This possibility still needs regulation by ANEEL.
For further clarification on the contents of this memorandum, contact:
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Rosi Costa Barros
rosi.barros@nbfa.com.br
(11) 3007-8370
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Willian de Figueiredo Lins Junior
willian.lins@nbfa.com.br
(11) 3007-8370
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Luisa Tortolano Barreto
luisa.barreto@nbfa.com.br
(11) 3007-8370
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